The Economics of Donations and Enlightened Self‐Interest

Abstract

We use a unique dataset from the English National Opera to study what motivates individuals to donate. The data includes both attendance and benefits (granted and consumed) by all donors. We find that individuals clearly respond to incentives. However, only some individuals are motivated exclusively by private benefits. Some individuals are willing to fund public goods, even though they could free‐ride. Moreover, donors who attend special events or new productions develop loyalty and increase their donations over time. Finally, individuals are sensitive to social pressure and network connections. These results can help charities to refocus the design of their fund‐raising.

Keywords: donations, charity, altruism